What is EMI and Why It Matters
EMI (Enterprise Management Incentives) is a tax-advantaged share option scheme in the UK designed to help companies attract or retain employees by giving them stock options that can benefit from favourable income tax, National Insurance, and Capital Gains Tax treatment if conditions are met. For scale-ups and start-ups, this is a powerful tool.
Key Changes from 6 April 2026 (Finance Act 2026)
These changes significantly broaden eligibility and improve flexibility:
| Element | Old Limit | New Limit from 6 April 2026 |
|---|---|---|
| Company option cap | £3 million | £6 million (gov.uk) |
| Gross assets | £30 million | £120 million (gov.uk) |
| Employee number | Less than 250 employees | Less than 500 employees (gov.uk) |
| Qualifying exercise period (new options) | Up to 10 years | Extended to 15 years (gov.uk) |
| Existing options | – | Can be amended to take advantage of the 15-year period if exercised after 6 April 2026 and not already expired or exercised. (gov.uk) |
Who Can Benefit Most?
- Scale-ups that previously exceeded thresholds under the old regime but were ineligible for EMI.
- Founders and early-stage employees, as the extended exercise period offers more leeway and potentially lower pressures to exercise earlier.
- Companies planning recruitment: new hires may receive better option terms.
Example Scenario
Consider a tech scale-up with 400 employees and gross assets of £80 million. Under the old scheme, it was ineligible for EMI. After 6 April 2026, it becomes eligible. The company can grant options with a cap of up to £6 million stock value and allow employees 15 years to exercise them, reducing financial stress.
Practical Actions for Companies & Employees
- Review your existing or planned EMI option agreements. If options are outstanding and not yet exercised or expired, consider amending them to leverage the new 15-year period. Be mindful of legal wording (see Schedule 5 ITEPA) and variation rules. (gov.uk)
- Companies over the old limits should now check if they can qualify under the new thresholds.
- Employees granted options should confirm exercise periods and valuation caps.
- Consult advisers early to ensure that amendments do not violate “specified company” restrictions which remain excluded from the beneficial changes. (gov.uk)
Implications
These changes represent significant tax planning opportunities, especially for growing companies. They reduce barriers for scaling businesses and make stock-based compensation more accessible. However, as always, careful documentation, legal compliance, and awareness of qualifying conditions is critical to ensure reliefs apply.